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January 13, 2019

PTAB Issues Final Written Decision in Cannabis Patent IPR

On January 3, 2019, the U.S. Patent and Trademark Office Patent Trial and Appeal Board (PTAB) issued a Final Written Decision in Insys Development Co., Inc. v. GW Pharma Ltd. (IPR2017-00503), a landmark inter partes review (IPR) decision involving a cannabis patent. Although the PTAB found claims 1 and 2 to be unpatentable as obvious, the remaining 11 claims that were challenged survived and remain valid (and potentially enforceable).

At issue in this IPR was U.S. Patent No. 9,066,920 ("the '920 Patent," entitled "Use of one or a combination of phyto-cannabinoids in the treatment of epilepsy"), which was originally assigned to GW Pharma Ltd. and Otsuka Pharmaceuticals Co., Ltd.

GW Pharma owns an extensive patent portfolio with many patents directed to treating diseases using cannabis-based formulations. Notably, GW Pharma, along with its U.S. subsidiary, Greenwich Biosciences, made history in the cannabis industry by becoming the first entity to receive FDA approval of a drug (Epidiolex) that contains an active ingredient (cannabidiol or CBD) derived from a cannabis plant. CBD is a non-psychoactive cannabinoid that can be naturally produced and derived from portions of cannabis plants, typically hemp.

Insys Development Company, Inc., a pharmaceutical company that focuses on cannabinoids and drug delivery systems, petitioned to cancel all thirteen claims of the '920 Patent as obvious based on three different combinations of references that included scientific articles as well as one of GW Pharma's own published PCT applications.

1. A method of treating partial seizure comprising administering cannabidiol (CBD), to a patient wherein the CBD is present in an amount which provides a daily dose of at least 400 mg.

Dependent claim 2 of the '920 Patent recites:

2. The method of claim 1, wherein CBD is present in an amount which provides a daily dose of from 400 to 800 mg.

Before conducting the obviousness analysis, the PTAB considered whether the term "partial seizure" in claim 1 needed to be construed. Insys argued that "partial seizures" meant seizures that can include secondary generalized seizures. However, GW Pharma argued that the term did not need to be construed because, even under Insys's construction, Insys had failed to show that a person of ordinary skill in the art (POSA) would have been motivated to increase the dosage of CBD described by one of the primary references and would have had a reasonable expectation of success that the higher dosage could treat partial seizures. Ultimately, because GW Pharma did not dispute that the asserted references applied to the treatment of partial seizures, the PTAB did not find it necessary to construe the term in order to determine the patentability of the challenged claims.

Regarding the obviousness challenge, Insys argued that all claims of the '920 Patent were obvious because the primary reference taught treatment of epilepsy with CBD, and a POSA "would have concluded that the claimed daily dosage of at least 400 mg of CBD is predictable, safe, and expected" in view of the combination of asserted references.[1] GW Pharma countered that, at the time of invention, CBD was "at best, a promising candidate for further study" and that a POSA would have "no reasonable expectation that CBD would treat partial seizures at all, let alone at doses of 400 mg or higher," as claimed by the patent.[2]

The PTAB found that Insys demonstrated by a preponderance of the evidence that claim 1 (the broadest claim of the patent) and dependent claim 2 were obvious over two of the three asserted combinations of references. Both combinations relied on the same primary reference, which described clinical studies involving administering CBD to epileptic patients. Although the primary reference described a daily dose of CBD that was less than 400 mg, the PTAB found that the combination of asserted references, when read together, would have led a POSA to reasonably believe that the amount of CBD could be safely increased to the claimed dosage of at least 400 mg/day because, as of the time of invention, "CBD had been shown to be well tolerated in humans without any serious side effects or toxicities at doses up to 600 mg."[3]

Regarding claims 3-13, Insys argued that those claims were obvious over the asserted combinations of references for the same reasons that claims 1 and 2 were obvious. GW Pharma argued that Insys failed to identify where most of the limitations of claims 3-13 were disclosed in the prior art, and also did not present expert testimony as to why those dependent claims would be obvious. The PTAB agreed with GW Pharma on this point, and found that Insys failed to meet its burden to show that claims 3-13 were obvious over any of the asserted combinations of references.

Although claims 1 and 2 were deemed unpatentable, the '920 Patent remains largely intact following the PTAB's decision with claims that are still fairly broad relative to claim 1. In particular, dependent claims 6 and 9 only further require that "the CBD is present as a plant extract" and "the CBD is present as a pure or isolated cannabinoid," respectively.

Whether Insys or GW Pharma will appeal the Final Written Decision remains to be seen. If they do, there are essentially two routes: (1) panel rehearing, then potentially the Federal Circuit (and maybe even the Supreme Court); or (2) straight to the Federal Circuit. Either way, the industry will be watching closely over the next two months to see where the parties go next before the deadline to challenge this opinion passes.

And, as we have previously noted, this IPR raises some important implications for challenging and enforcing patents in the cannabis space. One key takeaway from this decision is that the PTAB seemed to treat this cannabis patent just like any other patent subject to an IPR challenge (the fact that cannabis remains a Schedule I drug was not an issue). Therefore, this decision may provide some clarity (or at least hope) to canna-patent owners and third-party challengers that IPR proceedings (and likely other USPTO post-grant proceedings) are at least one option for challenging cannabis patents.

Additionally, as canna-patents continue to make their way through the federal courts (including, e.g., one of the first cannabis patent infringement lawsuit underway in the U.S. District Court for the District of Colorado—United Cannabis Corp. v. Pure Hemp Collective Inc. (1:18-cv-01922)), the industry may expect to see even more IPR challenges of cannabis patents, as well as more frequent patent application filings, following the legitimization of canna-patent infringement cases in district courts.

At bottom, in light of these decisions and others, the message to canna-patent owners and applicants seeking to protect their innovations is what it has always been—obtaining canna-patents is highly valuable for companies in this industry, as these canna-patents will serve as irreplaceable stakeholders as the market continues to normalize and expand. And the stakes will continue to increase as courts and federal agencies take note.